The disparity between rental yields in northern and southern England decreased during the second quarter of 2026, according to data from Fleet Mortgages’ latest Rental Barometer.
Average rental yields across England and Wales increased by 0.3 percentage points year-on-year to 7.8% in Q2, though this represented a decline from 8.1% recorded in the first quarter of 2026.
Regional variations
The North East maintained the highest average rental yield at 9.2%, despite falling 0.6 percentage points compared with the previous quarter. Yorkshire and Humberside saw yields decline by 0.3 percentage points, while the West Midlands experienced a 0.6 percentage point decrease.
In contrast, Greater London yields rose from 6.1% to 6.3% during the quarter, while the South East remained stable at 6.9%. The data suggests that whilst the traditional North-South divide persists, it is becoming less pronounced as yields in higher-performing northern regions begin to plateau.
Buy-to-let activity increases
Fleet Mortgages reported signs of increased activity in the buy-to-let sector. Purchase business rose from 33% of mortgage applications in Q1 to 36% in Q2. Portfolio landlords with four or more properties accounted for more than 62% of applications, while limited company borrowing represented 78% of all applications.
The mortgage market experienced volatility during the early part of the quarter as financial markets responded to conflict in Iran and rising swap rates. However, conditions improved later in the period, enabling lenders to reduce mortgage rates and reintroduce products that had been withdrawn during the uncertainty.
Steve Cox, chief commercial officer at Fleet Mortgages, said: “One of the more interesting themes from this quarter’s Rental Barometer data is that the gap between North and South does appear to be narrowing slightly, which suggests opportunities continue to exist across a much broader range of locations.”
Cox added that the mortgage market recovery created “a much more positive backdrop for landlords than appeared likely earlier in the quarter,” noting that tenant demand remains strong and purchase activity has increased. The findings come as the rental sector faces demographic shifts and ongoing challenges with property transaction times.
Market outlook
The data indicates that professional landlords continue to invest in areas where they identify long-term value, with the narrowing yield gap potentially broadening the geographic scope for investment opportunities beyond traditional high-yield northern markets.
